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Futures tumble as tariff battles begin (0:25), OpenAI launches new AI agent (2:15), Musk moves to shut down aid agency (3:30).
Transcript
Stock index futures slumped on Monday, after President Donald Trump authorized tariffs on Canada, Mexico and analysts say look set to spark a trade war.
S&P 500 futures (SPX) -1.5%, Nasdaq 100 futures (US100:IND) -1.8% and Dow futures (INDU) -1.3%.
The 10-year Treasury yield (US10Y) was flat at 4.5%. The 2-year yield (US2Y) rose 6 basis points to 4.28%.
Trump on Saturday imposed 25% tariffs on most imports from Canada and Mexico and a 10% tariffs on Chinese goods, effective Tuesday.
U.S. stock averages ended in the red Friday, driving lower after the Trump administration said tariffs on key U.S. trading partners will go into effect, delivering on a campaign pledge telegraphed to markets.
What “Trump did was follow through on exactly what he’s been saying he’s going to do since November. The market has refused to take that threat seriously, though, completely under-pricing the risks. So, this leaves the weekend news as a severe shock,” Deutsche Bank’s Jim Reid said.
If implemented and prolonged, Canada and Mexico would likely go into an imminent recession and potentially see a bigger shock than Brexit was for the UK, Reid added.
“U.S. price increases will be rapid for some items, with reports of fuel companies announcing price increases already. There may be profit-led inflation if consumers expect price increases. China was able to reroute exports after Trump’s first-term taxes, but that is difficult for Canada and Mexico,” UBS’ Paul Donovan said.
Canada Prime Minister Justin Trudeau said Canada will place 25% tariffs on $155 billion in U.S. imports in retaliation for those tariffs enacted by President Donald Trump.
On Sunday, Microsoft (NASDAQ:MSFT)-backed OpenAI launched a new feature in ChatGPT called “deep research”, an agentic capability that conducts multi-step research on the internet for complex tasks.
The AI company said it is the company’s next agent that can do work for the user independently. Following a prompt, ChatGPT will find, analyze, and synthesize hundreds of online sources to create a comprehensive report at the level of a research analyst, the company added.
OpenAI noted that deep research marks a significant step toward our broader goal of developing Artificial general intelligence, or AGI.
AGI refers to the hypothetical intelligence of a machine that possesses the ability to understand or learn any intellectual task that a human can.
Deep research is available on ChatGPT web, and will be rolled out to mobile and desktop apps this month.
The company was working on bringing access to users in the U.K., Switzerland, and the European Economic Area.
Last month, OpenAI’s AI models saw new competition from Chinese startup DeepSeek AI. The AI’s entry into the race jolted the U.S. tech world after the company detailed in a paper how large language models, or LLMs, could be built on tight budgets and improved without human supervision.
Elon Musk, CEO of Tesla (TSLA) and SpaceX (SPACE) and head of the new Department of Government Efficiency (DOGE) in the Trump administration, has said he is moving to shut down the U.S. Agency For International Development (USAID).
Musk said in a podcast that the federal aid agency, the largest in the world, was “beyond repair” and should be dismantled.
The DOGE has already made moves in recent days to cut down on the USAID. This included removing dozens of agency staff, including two top officials who tried to stop DOGE officials from accessing parts of the building, according to a Reuters report on Monday.
Trump also halted almost all foreign aid coming from the agency, which disbursed $72B in funding over FY 2023 in programs around HIV/AIDS, women’s health and clean water access.
USAID provided 42% of humanitarian aid in 2024, tracked by the U.N. Its website has been offline since Sunday.
Some of Monday’s biggest stock movers:
Stratasys (NASDAQ:SSYS) shares surged 7% after the company reported Q4 preliminary revenue.
Shopify (NYSE:SHOP) shares fell 6% after CEO Tobi Lutke criticized Canadian Prime Minister Justin Trudeau for retaliating with tariffs against the U.S.
Crypto stocks saw a decline after Bitcoin (BTC-USD) briefly touched the $95,000 mark, dropping about 4%, as risk-off sentiment took hold following U.S. President Donald Trump’s announcement of fresh tariffs on Canada, Mexico, and China over the weekend.
Automakers also face pressure from the new tariffs, as many build vehicles in Mexico or Canada and export them to the U.S. Analysts warn that the tariffs could disrupt the critical supply chain between the three countries. This hit U.S. automakers in premarket trading. (GM) in particular is significantly affected, as it depends more on Mexico for production than any other manufacturers.
The economic calendar is on the lighter side today, with the January manufacturing PMI expected to report during market hours. It is expected to come in at 50.1.
The construction spending data will also be released during market hours, and is forecasted to advance 0.3% in December.
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